DigitalBridge (US:DBRG)2021-11-08 16:00PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents DigitalBridge Group's unaudited consolidated financial statements, including balance sheets, statements of operations, and cash flows, detailing the digital transformation and asset dispositions Consolidated Balance Sheets Total assets decreased to $15.4 billion from $20.2 billion due to reclassification and sale of non-digital assets, with liabilities also decreasing Consolidated Balance Sheet Summary (Unaudited) | Metric | September 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Assets | $15,442,981 | $20,200,560 | | Assets held for disposition | $5,470,027 | $11,237,319 | | Total Liabilities | $9,406,541 | $12,910,692 | | Liabilities related to assets held for disposition | $3,831,563 | $7,886,516 | | Total Stockholders' Equity | $2,055,857 | $2,501,471 | | Total Equity | $5,688,270 | $6,984,590 | Consolidated Statements of Operations Total revenues more than doubled to $252.2 million in Q3 2021, while net loss attributable to common stockholders significantly narrowed to $(365.0) million for the nine months Statement of Operations Highlights (Unaudited) | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $252,174 | $123,017 | $709,942 | $261,040 | | Loss from continuing operations | $(40,935) | $(52,649) | $(183,451) | $(524,116) | | Loss from discontinued operations | $(10,429) | $(308,581) | $(590,595) | $(2,960,164) | | Net Loss | $(51,364) | $(361,230) | $(774,046) | $(3,484,280) | | Net income (loss) attributable to common stockholders | $41,036 | $(205,784) | $(365,030) | $(2,610,208) | | Net income (loss) per share—basic | $0.08 | $(0.44) | $(0.76) | $(5.51) | Consolidated Statements of Cash Flows Net cash from operating activities increased to $181.4 million, while investing activities provided $85.7 million, a reversal from prior year's cash use Cash Flow Summary (Unaudited) | Activity (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $181,412 | $89,886 | | Net cash provided by (used in) investing activities | $85,698 | $(981,923) | | Net cash provided by financing activities | $198,221 | $363,225 | Notes to Consolidated Financial Statements The notes detail accounting policies, business transformation to digital infrastructure, significant acquisitions, reclassification of non-digital assets, debt, equity, and segment reporting changes - The company changed its name to DigitalBridge Group, Inc. (DBRG) on June 22, 2021, to reflect its transformation into a firm focused on digital infrastructure36 - As of September 30, 2021, the company has $49 billion of total assets under management (AUM), with $38 billion dedicated to digital real estate and infrastructure36 - The company's hotel business, Wellness Infrastructure segment, and a majority of its Other Equity and Debt (OED) investments and Other Investment Management (Other IM) business have been classified as discontinued operations due to a strategic shift3858 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's digital transformation, asset monetization, segment growth, AUM changes, and liquidity, highlighting a new securitized financing facility and deleveraging efforts - The company is in the final stages of its digital transformation, with pending sales of its Wellness Infrastructure business for $281 million and a majority of its OED and Other IM business for approximately $535 million232235 - In July 2021, the company replaced its corporate credit facility with a new $500 million securitized financing facility, providing longer-duration financing at a lower cost of capital and with greater flexibility243299 Assets Under Management (AUM) Shift to Digital (in billions) | Category | Sep 30, 2021 (in billions) | Dec 31, 2020 (in billions) | | :--- | :--- | :--- | | Total Digital AUM | $37.8 | $30.0 | | Total Non-Digital AUM | $11.6 | $22.0 | | Total Company AUM | $49.4 | $52.0 | Fee Earning Equity Under Management (FEEUM) (in billions) | Category | Sep 30, 2021 (in billions) | Dec 31, 2020 (in billions) | | :--- | :--- | :--- | | Total Digital FEEUM | $16.5 | $12.8 | | Total Non-Digital FEEUM | $4.4 | $7.2 | | Total Company FEEUM | $20.9 | $20.0 | Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to various market risks, including credit, interest rate, and foreign currency risks, and details hedging strategies and sensitivity analysis - The company is exposed to credit risk from tenants/operators of its properties and from its portfolio of loans receivable331 - Interest rate risk is managed through hedging instruments like interest rate caps, and foreign currency risk (EUR and GBP) is managed with currency hedges, expected to decrease with OED portfolio monetization334336 Interest Rate Sensitivity Analysis (Annual Impact) | Change in Index Rate | Increase/(Decrease) in Interest Expense (in thousands) | | :--- | :--- | | +2.00% | $42,122 | | +1.00% | $21,351 | | Max Decrease | $(1,585) | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2021340 - No material changes were made to the internal control over financial reporting during the quarter ended September 30, 2021341 PART II. OTHER INFORMATION Legal Proceedings As of September 30, 2021, the company was not involved in any material legal proceedings - The Company was not involved in any material legal proceedings as of the end of the reporting period345 Risk Factors This section refers to the 'Risk Factors' section in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The report directs readers to the Risk Factors section of the Annual Report on Form 10-K for the year ended December 31, 2020346 Unregistered Sales of Equity Securities and Use of Proceeds In Q3 2021, the company issued 500,000 shares of class A common stock to a former employee to satisfy an OP Units redemption request - In Q3 2021, the company issued 500,000 shares of class A common stock to a former employee in exchange for OP Units347 Defaults Upon Senior Securities No defaults upon senior securities were reported by the company - The company reported no defaults upon senior securities348 Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable to the company350 Other Information No other information was reported for this item - The company reported no other information for this item351 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, and officer certifications